Serviced office and co-working providers have accounted for the largest share of space leased in Central London for the first time, according to the latest research from Cushman & Wakefield.
During the first half of 2017, serviced office or co-working providers – such as WeWork and The Office Group – accounted for 884,235 sq ft of newly-leased office space in central London. The second quarter of the year in particular witnessed a dramatic escalation in activity by serviced office and co-working providers with 651,540 sq ft leased – around a quarter of central London’s take-up across April, May and June. This was more than London’s traditionally dominant occupational sub-sectors such as technology, media and financial services.
The H1 2017 total is more than serviced office and co-working providers accounted for in the whole of 2016 (853,178 sq ft). and is just a deal or two shy of the sector’s average annual take-up between 2012 and 2016 (908,972). It seems certain therefore that serviced office and co-working providers will this year surpass their record annual volume of 1,267,926 sq ft set in 2014.
Amy Emery, Head of Serviced Office Advisory, Cushman & Wakefield, said: “This most recent quarter was a defining one for the serviced office and co-working sector with barely a day going by without another significant announcement. The market is becoming increasingly competitive and large-scale operators WeWork, The Office Group and London Executive Offices all increased their footprint across central London. WeWork are currently offer to buy or lease a further 350,000 sq ft so the trend we are seeing will continue.”
“More traditional owners have also made serious moves into the sector in the last quarter with British Land launching its Storey concept and Blackstone buying a majority stake in The Office Group. Each development is further evidence of the fundamental changes occurring in the occupational market driven by a desire from companies of all sizes for greater flexibility.”
In total, 4.8 million sq ft was let in Central London during the first half of the year – up 10% on the same period in 2016.
Elaine Rossall, Head of Central London Research, Cushman & Wakefield, said: “Serviced office and co-working providers aren’t the only reason for the positive occupational picture in London but the two biggest transactions in the second quarter of this year have both involved WeWork as tenant. At a time when some sectors are wrestling with the impact of technology, Brexit or both, the rapid expansion of serviced office and co-working space has meant that this hasn’t translated into any slack in the market. It also means that the variety of office workspaces on offer to occupiers in London is arguably better than ever before.”
